Newtzo Knowledge Base

Is Invoice Factoring Right for Your Business? Here’s What You Need to Know

Written by D'Anna | Jul 28, 2025 4:43:02 PM

Cash flow is the lifeline of every business. But what happens when your customers take 30, 60, or even 90 days to pay their invoices? If you're waiting on payments to cover payroll, inventory, or overhead — invoice factoring might be the solution you’ve been looking for.

At Newtzo, we work with businesses every day that need quick access to capital without jumping through the hoops of traditional loans. Invoice factoring is one of the most powerful and underutilized tools available to small and midsize businesses.

Let’s break it down:

What Is Invoice Factoring?

Invoice factoring is a financing solution where your business sells unpaid customer invoices to a third-party factoring company (called a “factor”) at a discount in exchange for immediate cash.

Here’s how it works in a nutshell:

  1. You provide goods or services and issue an invoice to your customer.

  2. A factoring company buys that invoice and advances you up to 90% of its value within 24–48 hours.

  3. Once your customer pays the invoice, the factor sends you the remaining balance (minus a small fee).

Why Businesses Use Invoice Factoring

Invoice factoring isn’t debt — it’s the conversion of assets (your receivables) into working capital. That’s a game-changer for businesses that:

  • Have slow-paying customers

  • Can’t afford to wait 30+ days to access funds

  • Want to avoid taking out traditional loans

  • Need cash to fulfill new orders, make payroll, or buy inventory

Benefits of Invoice Factoring

Fast Access to Cash – Get paid in days, not months
No New Debt – You’re not borrowing; you're selling an asset
Flexible Approval – Decisions are based on your customers’ credit, not yours
Improved Cash Flow – Smooth out the ups and downs of slow invoice cycles
Growth Ready – Take on new clients or projects without waiting for old invoices to clear

Is Invoice Factoring Right for You? Ask Yourself:

  • Do I often experience cash flow gaps due to delayed payments?

  • Are most of my customers businesses (B2B) with good credit histories?

  • Would immediate access to capital help me take on more clients or scale operations?

  • Do I want to avoid taking on traditional loans or high-interest debt?

If you answered yes to one or more of these questions, invoice factoring could be a strong fit for your business.

Industries That Commonly Use Factoring

Invoice factoring is especially popular in industries where waiting on payments is the norm:

  • Trucking & Freight

  • Staffing Agencies

  • Construction & Contractors

  • Manufacturing

  • Wholesale & Distribution

  • Professional Services (like marketing or consulting)

What Does It Cost?

The cost of factoring varies depending on:

  • The size and volume of your invoices

  • The creditworthiness of your customers

  • The length of the payment terms

Typically, factoring fees range between 1% and 5% of the invoice amount — and many businesses find that the ability to stay liquid and grow makes that a worthwhile investment.

How Newtzo Can Help

At Newtzo, we work with a trusted network of factoring companies who understand your industry and offer competitive terms. We’ll help you:

  • Compare factoring options

  • Get matched with the right funding partner

  • Start receiving advances in as little as 24–48 hours

Ready to Get Paid Faster?

If you’re tired of chasing down payments or turning away growth opportunities due to cash flow issues, invoice factoring may be the financing strategy that unlocks your next stage of business success.

📞 Call us at (980) 351-2693
📩 Or email: hello@newtzo.com
🌐 Learn more at www.newtzo.com